Published by Global Banking & Finance Review®
Posted on July 30, 2025
5 min readLast updated: January 22, 2026
Global stocks fell and the dollar rose after Fed Chair Powell indicated no imminent rate cut, impacting markets worldwide.
By Sinéad Carew and Samuel Indyk
NEW YORK/ LONDON (Reuters) -MSCI's global equities gauge stumbled on Wednesday while the U.S. dollar extended gains after Federal Reserve chair Powell dampened investor hopes for an interest rate cut in September, saying that it was too soon to make a decision and copper prices tumbled on hefty U.S. tariff announcements.
The Fed left interest rates unchanged at the end of its two-day policy meeting and noted moderating economic growth and the central bank gave little indication of when borrowing costs might be lowered. The decision to hold rates steady drew dissents from two of the U.S. central bank's governors, both appointees of U.S. President Donald Trump who has been constantly berating Powell for the lack of rate cuts.
The equity market reaction to the Fed's statement was muted. But stocks lost ground sharply as Powell said during a press conference that the Fed would decide on cut rates after it examines economic information in the run-up to its next gathering, in September.
“Markets wanted to hear that rate cuts were teed up for September, but received no indication of such from Powell. The President had usurped the Fed's forward guidance a little with his statements on where short term interest rates should be. Powell simply reminded markets that the FOMC sets the policy rate, not Congress and not the President, so markets needed to reprice the level of rates for the next few months,” said Jamie Cox, managing partner at Harris Financial Group.
On Wall Street the Dow Jones Industrial Average fell 171.71 points, or 0.38%, to 44,461.28, the S&P 500 fell 7.96 points, or 0.12%, to 6,362.90 and the Nasdaq Composite rose 31.38 points, or 0.15%, to 21,129.67.
MSCI's gauge of stocks across the globe fell 2.65 points, or 0.28%, to 933.15.
"As we expected, September is in play, but Powell walked back the probability of a September cut," said Tony Welch, chief investment officer at SignatureFD, adding that the Fed has two more inflation and employment reports to review before the meeting. "If inflation data moderates and growth softens, then we would expect a cut. If conditions match today – slower but positive growth and lingering inflation, then a rate cut is unlikely."
In currencies, the dollar advanced further as Powell spoke. The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 1.01% to 99.89.
The euro down 1.13% at $1.1416 while sterling weakened 0.78% to $1.3244 and the Canadian dollar weakened 0.52% versus the greenback to C$1.38 per dollar.
Against the Japanese yen, the dollar strengthened 0.67% to 149.43 and against the Swiss franc, the U.S. currency strengthened 0.98% to 0.814.
In the government bond market, U.S. Treasury yields added to gains due to Powell's uncertainty about a cut at the Fed's next meeting in September.
The yield on benchmark U.S. 10-year notes rose 3.8 basis points to 4.366%, from 4.328% late on Tuesday while the 30-year bond yield rose 2.7 basis points to 4.8949%. The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 5.9 basis points to 3.935%.
Oil prices ended their session up more than 1% as investors awaited developments on Trump's tighter deadline for Russia to end the war in Ukraine and his tariff threats to countries that trade its oil.
U.S. crude futures settled up 1.14%, or 79 cents at $70 a barrel and Brent closed at $73.24 per barrel, up 1.01% or 73 cents on the day.
Meanwhile on the trade front, Trump had a busy day, signing an order for 50% tariffs on certain copper products as of August 1, causing U.S. Comex copper futures HGc2 to plunge 19.5%. This quickly unwound a premium over the London global benchmark that had grown in recent weeks as traders had assumed U.S. copper mines would see a financial benefit from the tariff.
He also signed an order for tariffs amounting to 50% for U.S. imports from Brazil. Earlier, he had announced a 25% tariff on U.S. imports from India starting also on August 1. This was after talks between the U.S. and China concluded on Tuesday without any major breakthroughs.
Elsewhere in commodities, gold prices added to losses after the Fed's rate decision and Powell's comments. The precious metal was already lower after the solid U.S. economic data.
Spot gold fell 1.58% to $3,273.59 an ounce.
Releases earlier in the day showed U.S. economic growth rebounded more than expected in the second quarter, but that grossly overstated the economy's health as declining imports accounted for the bulk of the improvement and domestic demand rose at its slowest pace in 2-1/2 years.
And on the labor side, U.S. private payrolls increased more than expected in July, according to the ADP National Employment Report. Private payrolls rose by 104,000 jobs last month after a revised 23,000 decline in June. Economists polled by Reuters had forecast private employment increasing 75,000 following a previously reported drop of 33,000 in June.
(Reporting by Sinéad Carew, Samuel Indyk and Gregor Stuart Hunter; Editing by Muralikumar Anantharaman, Sam Holmes, Chizu Nomiyama and Marguerita Choy)
An interest rate is the amount charged by a lender to a borrower for the use of assets, typically expressed as a percentage of the principal.
A stock market is a collection of markets where shares of publicly held companies are issued and traded, either through exchanges or over-the-counter markets.
The currency market, also known as the foreign exchange market, is a global decentralized market for trading currencies, where participants can buy, sell, exchange, and speculate on currency values.
Economic growth refers to the increase in the production of goods and services in an economy over a period of time, usually measured by the rise in Gross Domestic Product (GDP).
A commodity price is the market price for a specific commodity, which can fluctuate based on supply and demand dynamics in the market.
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